The Department of Health (DoH) has touted savings of £1bn by renegotiating its massive contract with US company Computer Sciences Corporation (CSC) for NHS IT systems.
The contract was inked 10 years ago with the intention of providing every NHS patient with an electronic record, a system referred to as the Lorenzo IT system.
The project, under the National Programme for IT (NPfIT), was bedevilled by setbacks and was widely criticised for its rising costs. The government has announced it would dump the programme altogether.
The Department of Health said it will continue to work with CSC but in a new contract that will save the NHS £1bn.
Such a renegotiated contract has been expected since March, when the Department of Health signed a Letter of Intent with the CSC to revamp its contract.
Now CSC will no longer hold exclusive rights to be the only provider of clinical IT systems in much of England.
Government health minister, Simon Burns, said it is important to allow local hospitals and NHS organisations the power to make their own decisions about the IT systems they use.
"By dismantling the NPfIT, this new agreement will save taxpayers over £1bn which will be reinvested in patient care and front line services," he said.
"We've removed the restrictive, top-down, centralised approach."
Meanwhile, Minister for the Cabinet Office Francis Maude said the announcement shows suppliers the government is prepared to "strip out waste" from contracts that offer poor value for the taxpayer.
CSC will continue to roll out its Lorenzo Electronic Patient Record system to 10 NHS organisations it is already working with.
In April, CSC announced plans to cut 640 members of staff by July. UK union Unite has argued this reduction in CSC staff is a result of cuts to its failed NHS contracts.
In October last year CSC had to repay £174m because of the project's failure.
The end of the NPfIT will mean NHS Trusts, currently facing servere funding cuts, are now likely to be financially responsible for installing and upgrading their own patient record IT systems.
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